Have you seen the engine yourself? Do you know where exactly the water is "pouring out of"? Those blocks are very tough, and yours may or may not be damaged. It could be that your head is cracked, IMHO that would be much more likely.

My girlfriend's 940T burst a hose and lost it's coolant. It overheated massively, stalled, and she pulled over. Some ass told her to move the car off the highway, so she started it up again, and drove off the highway (interstate), where it stalled again, in the middle of another busy local highway. The shop that took the car in said simply that it "needed a new engine", at a cost of about 2000 for parts and 1000 for labor.

I priced out a new engine at $1200 for a 94 B230FT with about 90k miles on it, from a yard not far away. It would have been complete with manifolds and turbo.

I ended up having her car towed to my house, where I pulled the head off and it appeared that the block was fine. I had the head rebuilt (including resurfacing) for $300, it wasn't even cracked. For a total of $800 (I replaced some other stuff along the way) I had the car running better than before, and it's been fine since. If you can't do the labor yourself, it would cost a bit more, but my point is that you may not need a whole new engine.

Good luck!
Greg